Place the potatoes in a large saucepan or other pot and fill with water to cover. Add a generous amount of salt, approximately 1 tablespoon. Bring to a boil and cook until the potatoes can be easily pierced with a paring knife, being careful not to overcook.
Drain the potatoes. When cool enough to handle, slice the potatoes and transfer to a mixing bowl.
While the potatoes are cooking, brown the bacon until crisp. Remove with a slotted spoon and sprinkle over the potatoes. Reserve bacon grease.
Add the onion to the hot bacon grease and cook until tender, approximately 4-5 minutes, being careful not to brown the onions. (They will pick up some color from browning the bacon.)
Stir in the flour and cook 1-2 minutes.
Add the water, vinegar, sugar, 1/2 teaspoon salt and 1/2 teaspoon paprika. Bring to a boil, reduce heat to low, and simmer for 5-7 minutes or until thickened and the dressing is translucent.
Pour the hot dressing over the sliced potatoes and carefully fold it in.
Transfer to a serving bowl and garnish with sliced eggs and chopped fresh parsley. Serve immediately.